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AN OUNCE OF PREVENTION By Mary C. Nevius, Supervising Claims Counsel, Legal Mutual As part of its ongoing attempts to ensure that all of Legal Mutual’s insureds get the most out of their coverage, I would like to offer the following tips on how you can protect yourself and your firm in the event you become aware of a potential claim. First, familiarize yourself with the parts of the policy dealing with claims and reporting of same. Remember that the policy issued to you by Legal Mutual is a contract. Since you wouldn’t allow your clients to sign contracts without reading them first, why would you make that mistake in your own contractual dealings? You will find that the terms of the policy that address claim reporting are straightforward and self-explanatory. If, after reading the policy, you are left with questions, please call us for clarification. As with all contracts, both parties to a Legal Mutual policy undertake obligations. Your failure to comply with the terms of the policy dealing with the reporting of claims or potential claims is a breach of your obligations that may excuse Legal Mutual from the obligations it would otherwise have to provide you with a defense and/or indemnification. In the interest of avoiding that situation, I offer the following tip: when in doubt, report it! If the matter never actually becomes a real claim, reporting it doesn’t hurt a thing. And if it does, you will have protected yourself. Some attorneys, when faced with a smaller claim, might be tempted to try to resolve it directly with the client. This might be done out of a concern over increased premiums resulting from a claim, or because the value of the claim is less than the deductible, or out of embarrassment and a desire for a fast, confidential resolution. This road is, however, paved with danger for the following reasons. First, settling directly with the client, while appealing in the short run, is an ethical violation that may cause you enormous trouble with the Attorney Grievance Commission down the road. This is because the client, who purportedly has a malpractice claim against you, is now your potential adversary. Rather than maximizing the client’s recovery, as you were retained to do, your interest is now in making the problem go away for as little money as possible. If you choose, therefore, to resolve the matter directly with the client, you must insist that they consult with an independent attorney about the proposed settlement. Second, your attempts to resolve the matter yourself may cause you to fail to comply with Legal Mutual’s reporting requirements. This, in turn, may result in your losing coverage in the event that the entire matter devolves into either a grievance or a claim for damages. In summary, if you become aware of a potential claim as defined by the policy, don’t delay in reporting it, and don’t attempt to resolve it directly with the client. And, if after reading the policy, you still have questions in this regard, please call us for guidance. Important Legal
Notice: Contractually, notice of a claim, or potential claim, to
your insurance broker does NOT constitute notice to Legal Mutual.
We highly recommend that you notify BOTH Legal Mutual AND your insurance
broker as timely as possible of any claim, or potential claim. |
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© 1998-2007 Legal Mutual Liability Insurance Society of Maryland. All Rights Reserved. |
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